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Music industry urged to embrace the Internet Technology

CANNES, France (Reuters) - The music industry needs to learn from the "dark side of the Internet" that has so decimated its business if it is to ever regain the upper hand in the fight against piracy.

At the annual industry gathering in the south of France, executives revealed a sliver of optimism for the first time in years, after agreeing retail deals with the likes of Nokia, Amazon and MySpace.

But the music industry's many critics say executives need to relinquish more control and could even pick up some ideas from the pirates - people who have created services to download music illegally - who they are fighting.

After years of trying to protect its content and sue anyone who illegally downloaded it, the industry has moved to forge partnerships with online retailers as sales slump.

In 2008, some 95 percent of the music downloaded from the Internet, or more than 40 billion files, was illegal, leaving the overall music market down around 7 percent on 2007.

Michael Robertson, the head of MP3Tunes who had to speak via video link because he is still engaged in copyright infringement lawsuits in the United States, urged the industry to go further and allow more experiments with their music.

"When you sue a new technology, you lose the opportunity to channel that into a positive direction," he said.

"There is innovation happening but it's coming from the dark side of the Internet, from pirates, from the underground. And that is showing where the industry is going to be.

"You have to look underground, to see what people are doing and then give them commercial outlets that mirror that."

Consumers will only move to legal sites from illegal ones if the proposition is better and easier to use, critics say.

"There are only so many of those (large, established retailers) around," Ted Cohen, who has been involved in hosting the MidemNet conference for the last 10 years, told Reuters.

"The tap is going to run out. So there's got to be room for retailers who can't write a half a million dollar check."

CULTURE CLASH

One of the sharpest critics at Cannes was David Eun of Google, the owner of video sharing site YouTube, one of the most powerful music discovery tools on the Web.

"Being partners means that you work together ... and you don't necessarily presume that the other person is trying to screw you frankly," he told the audience at Cannes. Continued...